The deal that UFA and Sportsman's Warehouse announced on Nov. 26, 2008, indicating that UFA was interested in acquiring a majority interest in the U.S. retailer, has collapsed like a deck of cards under the weight of due diligence findings, leaving Sportsman's Warehouse scrambling to remain a viable business.

The deal that UFA and Sportsman's Warehouse announced on Nov. 26, 2008, indicating that UFA was interested in acquiring a majority interest in the U.S. retailer, has collapsed like a deck of cards under the weight of due diligence findings, leaving Sportsman's Warehouse scrambling to remain a viable business. Click here to read the SNEWS® story, "Lookout Cabela's and Bass Pro…here comes UFA Co-operative?"

Natalie Dawes, manager of corporate communications for UFA, told SNEWS that as a result of findings during due diligence, and also because of the continued deterioration of the North American economy, UFA decided it was in its best interest not to pursue an acquisition of Sportsman's Warehouse as it had been originally structured.

As a result, on March 11, Canadian-based UFA Co-Operative Limited announced that its wholly owned U.S. subsidiary, UFA Holdings Inc., had "acquired" 15 Sportsman's Warehouse locations spread across Oregon, Washington, Montana, Idaho and North Dakota. Dawes confirmed that this was not so much a sale as UFA taking possession of select stores to satisfy the terms of the loan it had provided to Sportsman's Warehouse in 2008. As of the transfer of ownership of those 15 stores to UFA, UFA has no more investment or financial interest in Sportsman's Warehouse, SNEWS was told.

While the stores on the doomed-to-close list remain active on the Sportsman's Warehouse website, all 15 stores that are now owned by UFA were removed from store locator maps and lists shortly after the acquisition was announced.

In all, where Utgaard once oversaw a growing retail empire of 67 stores spread over 29 states that reported $800 million in sales, he now finds himself hanging onto only 29 stores spread over 16 states. Sportsman's Warehouse is exiting Virginia, Pennsylvania, Wisconsin, Minnesota, South Dakota, Oklahoma, Mississippi, Arkansas, Washington, North Dakota and Indiana.

Although none of the nearly 800 employees will be losing their jobs at the 15 stores UFA has taken over, as many as 2,500 employees could soon be out of work at the closing Sportsman's Warehouse locations, leaving the company with approximately 2,300 employees on the payroll -- down from a zenith of 5,600 reported in 2008.

For the 15 stores now owned by UFA, Dawes told SNEWS that the company's immediate priority is ensuring the stores are stocked with inventory. "Inventory in the stores is currently extremely low. All things considered, our new stores and the employees are doing a fantastic job of serving customers. Those employees are troopers and truly amazing!"

When asked how UFA was going to differentiate its new stores from the old Sportsman's Warehouse, Dawes told us that the company was still determining what the ideal product mix would be, but stated it would likely not change too much from what customers have come to expect.

No word on what new name the stores will soon have, but there has been some speculation that the stores might soon sport the Wholesale Sports name, providing unity with the seven Canadian stores UFA acquired last year. Those stores are now part of UFA's Outdoor Adventure retail division, led by Chuck Cote, vice president of Outdoor Adventure.

"We cannot predict the future for Sportsman's Warehouse," said Dallas Thorsteinson, CEO and chairman of UFA, "but we are certain the acquisition of these specific locations is good news for the growth and sustainability of UFA."

A call to Utgaard on March 19 was not returned as of this story being filed.

--Michael Hodgson

SNEWS® View: While we are certain vendors are breathing a collective sigh of relief that UFA did not bail on the deal altogether, any happy feeling will be tempered with the sour knowledge that Sportsman's Warehouse is now closing 23 stores, meaning a loss of distribution that will certainly be felt. And from what we have heard, there are real fears Sportsman's Warehouse is far from out of the woods yet, meaning perhaps more closings, and possibly even a restructuring might be in the retailer's future unless business and the economy make a strong turn upward. Stu Utgaard's message on the company website announcing the sale of stores to UFA and impending store closing did little to assuage fears of more to come: "It is hoped that these actions (store closings and the sale of stores to UFA) will enable the firm to go forward as a viable entity with approximately 2,300 employees." Hope is a far cry from expected, indicating Utgaard is navigating uncharted waters with storms of unknown strength brewing all around the boat.

As for the as yet unnamed 15 stores that are now part of UFA's operational portfolio, vendors will be able to look forward to working with an entity that has financial strength and will more than likely pay its bills on time -- after negotiating the very best terms possible, of course. This is also good news for those 800 employees, as now they have an employer that is strong and healthy, which should translate to employment stability -- all very good news in this economic climate.

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